TFSA Update – Additional $5,500 of Room Available in 2014

TFSA Update – Additional $5,500 of Room Available in 2014

BACKGROUND

Tax Free Savings Account

TFSAs are in their fifth year. As of January 1st, 2014, you can now invest an additional $5,500. You do not have to set up a TFSA or file a tax return to earn contribution room. TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older and a resident of Canada.This brings the limit in 2014 to $31,000 per individual who was age 18 or older in 2009.

WHAT TYPE OF INVESTMENTS ARE ALLOWED?

In general, the types of investments that will be permitted in a TFSA are similar to those in an RRSP. These would include:

cash;

funds;

securities listed on a designated stock exchange;

guaranteed investment certificates (GICs);

bonds; and

certain shares of small business corporations.

DON’T GET PENALIZED!

72,000 Canadians in 2009 and 103,000 in 2010 received a letter from CRA of the over-contribution problem.

Just watch how you withdraw and contribute during a given year. Additions are counted but withdrawals are not adjusted until the following year. And yes, there can be a financial penalty!….Click here to read more